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05/04/2012

About the cost of a Big Mac

“The Economist’s Big Mac index is based on the theory of purchasing-power parity: that, in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries. Our basket consists of one McDonald’s Big Mac, and we’ve compared it with the average price in America, $4.20. According to our burgernomics, the Swiss franc is 62% overvalued: the exchange rate that would equalise the price of a Swiss Big Mac with an American one is 1.55 francs to the dollar; the actual exchange rate is only 0.96. The cheapest burger is found in India, where it costs just $1.62. Big Macs aren’t sold in India, so we’ve taken the price of a Mac Maharaja, made with chicken instead of beef.“

I personally find it a bit surprising since I eat lunch everyday for 60 rupees (about $1.14) and I have rice, vegetable, dal (lens soup) and 4 chapatis (bread).